Poor regulation has hampered the development of capital markets across the continent of Africa, with 87% of opinion leaders stating this had impacted the performance of the market in their country. Since 2012, however, African equity capital market transactions have still managed to raise a total of $44.9 billion, while investment sentiment towards the continent suggests that more is to come. A new study shows Eastern and Sub-Saharan nations can expect particularly robust growth.

Africa remains an area of opportunity for investors, in spite of key difficulties arising from decades of corruption and instability resulting from the continent’s colonial legacy. According to a new report from FTI Consulting, the continent can expect an influx of investments over the coming 12 months, following research conducted online by the Strategy Consulting & Research team involving 93 prominent opinion leaders in Africa. 22% of the market leaders who participated in the study said that they are likely to significantly increase their investment, with 51% stating that there will be a slight increase.

Contrary to another recent FTI report that suggested 58% of potential investors considered R&D and infrastructure as the least interesting prospect in the region, the biggest segment to see investment is forecast to be next generation communication and infrastructure implementation, with 56% of respondents predicting significant increases, while 31% expect at least a slight increase. Traditional infrastructure projects are also predicted to receive a boost to capital, with 31% of respondents saying that they expect investment to increase significantly and 51% saying that they expect investment to increase slightly.

A recent BCG study also stated that African markets were ripe to absorb more private equity investment. However, FTI’s latest document suggests that some locales are more attractive than others across what is a politically, economically and socially diverse continent.

The region with the most active investment interest across the continent, i.e. East Africa, is noted as garnering the most positive sentiment at 47% of respondents very positive and 43% as slightly positive. Sub Saharan Africa, which, according to the UN, consists of all African countries that are fully or partially located south of the Sahara desert, follows at 25% very positive and 54% slightly positive. West Africa, meanwhile, draws a very positive sentiment from 25% of respondents and a slightly positive response from 53% of respondents.

The areas with the least positive sentiment tended to be the least geo-politically stable in the region. Ravaged by continuing civil wars, including in the Central African Republic itself, Central Africa was rated 15% very negative and 51% slightly negative. In North Africa, meanwhile, which has seen sustained periods of political unrest since 2011 along with an increasing vulnerability to ISIS terror attacks and civil wars of the region’s own in Libya and Sudan, 10% of potential investors are very negative, while 24% are slightly negative.

The authors note that East Africa has done well to market itself as a destination for investment, including Kenya and particularly Rwanda, which has become a remarkable success story in spite of the notorious genocide which took place there just 23 years earlier. Rwanda was singled out for praise by researchers as a key example of how an African country’s government can work to attract international investment.

The country rose three places in the World Bank’s ‘Doing Business’ rankings in 2017, with notable improvements in the ability to start a business, register a property, trade across borders and enforce contracts. The East African nation also attracted heavy investment from China and Australia, as well as from other countries within Africa, while becoming a technology hub alongside Kenya.

The transformation in fortunes for the two nations shows the power of good marketing, aside from anything else. Rwanda are rated by 66% of FTI’s respondents as good at marketing themselves, while Kenya, who despite a prolonged political crisis in the wake of electoral corruption this year, were also cited by 64% as doing the same. Mauritius and South Africa performed well too at 50% each.

Ghana has also significantly improved its marketing standing, up from 19% in 2016 to 42% this year, with a similar story for Morocco, up from 20% to 41%. Ethiopia, Botswana and the Ivory Coast have improved their respective standings, at 36% each.

The Ivory Coast have suffered again from a protracted period of political unrest, with a high-profile military mutiny making global headlines throughout 2017. However, the impact of their government’s marketing of the nation as a destination for investment again goes to show that despite continued rifts in the region, Africa remains a lucrative enough opportunity for capital to take a risk on locations that can still present themselves favourably.

Respondents were also asked to identify which lobby/marketing groups were identified as particularly effective at encouraging ‘the right sort’ of investment into Africa, to boost local economies and benefit society.

African business leaders came out on top, cited by 82% of respondents, followed by international business leaders, at 56% of respondents. International investors, international media and media in Africa too were noted as effective – at 53%, 43% and 39% of respondents each.

Support from international politicians, international law and regulations and local African community leaders were least often cited as effective, at 6%, 11% and 18% respectively.

Finally the research asked participants to identify which factors are able to significantly impact the performance of capital markets in Africa. Poor regulation was the most highly cited response, at 87% of respondents, followed by political instability at 83% of respondents. Poor financial structures were also noted by 63% of respondents.

In spite of this, according to FTI’s whitepaper, there is cause for optimism. African equity capital market transactions increased to more than 450 since 2012, with total value raised up 8% over the same five year period to $44.9 billion.

The stereotypical way of looking at Africa from the perspective of European elites has traditionally been to inherently expect the worst, while labelling the region as a kind of burden which imperial states like Britain and France should take care of, helping themselves to the continent’s resources in the process. This attitude, while receding, is far from dead, and was exemplified by comments made by new French President Emanuel Macron earlier in 2017.

In a speech to the UN, Macron claimed nations were incapable of fighting internal corruption alone, while citing women who “today have seven or eight children” as one of many “civilisational” failings holding Africa back. Macron, who prompted accusations of racism via the speech, added that although France, a former colonial power that controlled dozens of territories across Africa, accepted responsibility to help with infrastructure, education and heath, a “simple money transfer” was not the answer due to these apparent failings, hinting at the expectation that African leaders should be made accountable to foreign governments providing aid.

While the diverse nations of Africa undoubtedly are hindered by geopolitical and socio-economic conditions however, they are no different to the international powers to which their markets are closely linked. Western nations were last year rocked by a number of economic and political crises of their own making, while the ill effects also had a knock-on impact on African economies. Joel Kibazo, Managing Director at FTI Consulting, said, “Last year was a difficult once for African capital markets due to global factors such as the US elections and Brexit. But we expect the growth and deepening of the capital markets in Africa to continue over the next five years as governments implement further reforms.”

Despite the impacts of Brexit and Trump on African investment meanwhile, the country has continued to perform well of its own accord over recent years. Remarking on areas where capital markets could thrive, Kibazo said, “Business leaders need to be able to work with African and international political leaders to help the continent continue to blossom. There is so much incredible potential in Africa at the moment, and we are beginning to see this kind of collaboration between business and government bear fruit in key markets.”